should I replay my loan in full earlier?

coconutcurls

Sorry if this will seem silly, I am not an experiment borrower

I took a ball loan of £2000 in November /2021 to buy a new laptop and phone as both died in the same week and I did not have any spare cash in that month to buy straight out (not even second hand refurbished devices) - I also like the apple stuff and have used it for ages - had some money left that I must have used for my daughter clothes...

Anyway, the highest interest I have paid so far was £40.56 in Jan/22 and the lowest £25.92 in October. My monthly repayment is of £106.60 and my balance as for today is £1.188.31

I have some extra money sitting in my account because I changed jobs since and I am earning a little better now. Should I pay the whole thing, negotiate a higher monthly repayment or just leave it? I never borrowed form a bank before and this was a impulse decision when I needed to get a phone and laptop asap so didn't even compare finance from other places.

Thank you

macman

To state the obvious, the sooner you pay it off, the less interest you will pay, subject to any fees for early repayment. On the other hand, you should aim to have some cash in your account for future emergencies.
You haven't stated what the APR is on your loan, which is the most crucial factor?

stuartp2000

Based on the loan value and remaining value I think you are on an interest rate of around 25% which is very high.
paying off today will save a further 150 off quid in future interest (you would need a settlement figure from them to clear early.

Any decision though is personal and you always are better to have cash available for emergency, but that is a high interest rate so even paying a lump off or overpaying each month would benefit you if you can afford.

Jami74

coconutcurls said:

I have some extra money sitting in my account because I changed jobs since and I am earning a little better now. Should I pay the whole thing, negotiate a higher monthly repayment or just leave it? 

When my wages went up I paid off my loan, it was such a great feeling. Then I set up a savings account and carried on putting the loan repayments into my own savings account

coconutcurls

macman said:

To state the obvious, the sooner you pay it off, the less interest you will pay, subject to any fees for early repayment. On the other hand, you should aim to have some cash in your account for future emergencies.
You haven't stated what the APR is on your loan, which is the most crucial factor?

27.90 %APR interest rate - 

coconutcurls

I will wait until the budget announcement and then make a decision. I am very inclined about clearing this off even if I will see less numbers in my current account. Do I have to pay a penalty if I decide to pay off earlier?

Ebe_Scrooge

coconutcurls said:

macman said:

To state the obvious, the sooner you pay it off, the less interest you will pay, subject to any fees for early repayment. On the other hand, you should aim to have some cash in your account for future emergencies.
You haven't stated what the APR is on your loan, which is the most crucial factor?

27.90 %APR interest rate - 

Ouch!

coconutcurls said:

I will wait until the budget announcement and then make a decision. I am very inclined about clearing this off even if I will see less numbers in my current account. Do I have to pay a penalty if I decide to pay off earlier?

Check the T&C's, but typically you'll be charged 2 month's interest for early repayment.  How much longer has the loan got left to run?  If it's more than a few months it'll almost certainly be financially worthwhile to repay it if you can.  Ask for a settlement figure then you can make a judgement from there.

The sensible thing to do then is to put aside into savings an amount equivalent to what your monthly loan repayments are.  That way, you'll rebuild your savings pot, plus a bit extra as you won't be paying interest to the lender.